Portfolio Boss Documentation

Introduction to The Divine Engine & The Boss



The “Divine Engine” is a revolutionary Artificial Intelligence feature that helps you design the ultimate strategy that fits your trading goals, schedule, and risk appetite. But most importantly, it allows you to keep your “edge” on the market, also known as Alpha. Alpha measures the excess return of a strategy compared to a benchmark's return (e.g. the S&P 500 index). And by nature, Alpha is about exploiting anomalies and inefficiencies in the market to generate greater returns. As such, Alpha may decay throughout time once the anomalies are found and corrected by the market forces, or exploited by other traders.

Think of it this way: the total population of traders as a whole generate the exact same return as the market. For every buyer there's always a seller, thus for every winner there's always a loser. Some traders win by sheer luck, others by their edge on the market. The question is, when will you be that loser. If you cling to a strategy for a long enough time, you will eventually become a loser, as the strategy's Alpha decays. The reversion to the mean is no joke.



Now with the Divine Engine, it creates unique strategies that you and only you will use. Not even other Divine Engine users have the exact same strategy you have. Therefore it greatly reduces Alpha decay by preventing other traders from using your system. Even at the eventuality that your strategy reverts to the mean, as attested by its now poor Out-of-Sample performance (Out-of-Sample performance that has passed might be good, but now the strategy starts reverting to the mean), you can ask the Divine Engine to craft another Alpha for you, thus keeping your edge sharp. But make sure the strategies you pick perform very well both in the In-Sample period and the Out-of-Sample. That way, you make sure they actually have Alpha, instead of fake Alpha generated by torturing the data hard enough to make it confess.

At Portfolio Boss, we're always innovating to find market anomalies. Not only we introduce new rules, filters, and algorithms, but we also dabble now in crunching intraday data. Intraday prices are notorious for the hysteria and manipulation, thus we hope with such “noise” we can find more anomalies that the Divine Engine can use. There's also the latest breakthrough where the A.I. writes its own technical indicators from scratch through Genetic Programming.


This Divine Engine tutorial is separated into four scenarios:

In the next pages, we'll discuss each scenario in great detail.


To give you an idea of how powerful the Divine Engine is, we have demo strategies that yield astoundingly high returns compared to the SPX's meagre 1,100%. These strategies come with CAGR well beyond 100%:



Do understand, the Divine Engine's powerful analytical skills come at a great processing power demand. Portfolio Boss does have a license-dependent local Divine Engine Queue so you can continue to view and build other strategies while you test your ideas. But if you were to run the Divine Engine backtest on your local computer, it may take weeks or even months keeping your PC alive 24/7.

That is the reason we have developed “The Boss”, a cloud-based strategy designer that allows you to run the Divine Engine with the thousands of CPU cores provided there. Here you'll learn how you can run The Boss, and have the ultimate strategy delivered to you not in weeks or months, but in mere minutes or hours.

Please note, you need a specific Portfolio Boss license to access the Divine Engine (and The Boss). If you wish to upgrade your license, please contact our Customer Support at support@portfolioboss.com




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